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Narrated by Steven Menasche
Steve ReillyUnabridged — 5 hours, 36 minutes
Narrated by Steven Menasche
Steve ReillyUnabridged — 5 hours, 36 minutes
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"Steve is a gifted communicator and talented advisor with a rare ability for connecting people with ideas to help them improve."
—Patrick Lencioni, president, The Table Group, and best-selling author, The Five Dysfunctions of a Team and The Advantage
"Steve is a gifted communicator and talented advisor with a rare ability for connecting people with ideas to help them improve."
—Patrick Lencioni, president, The Table Group, and best-selling author, The Five Dysfunctions of a Team and The Advantage
| BN ID: | 2940172365249 |
|---|---|
| Publisher: | Ascent Audio |
| Publication date: | 08/01/2016 |
| Edition description: | Unabridged |
CHAPTER 1
Common Mistakes and Crucial Skills
The Two Most Common Negotiation Mistakes
Before we begin to understand how to better deal with tough negotiators, it is crucial to identify the most common mistakes made by negotiators regardless of the industry, product, situation, or salesperson. Trying to take on hardball negotiators without understanding the two most ubiquitous negotiation blunders would be an exercise in futility.
Through my experience working in almost every type of industry, I've been able to identify the two most damaging negotiation mistakes.
Number One Negotiating Mistake: Giving Ground Too Easily
Literally, thousands of sales managers in hundreds of industries have shared this complaint with me. They complain that the number-one problem their salespeople suffer from when negotiating with customers is giving in on price and/or terms much too early in the process. My own field-coaching experience supports their claims, as every week I see salespeople agree to a first offer or position simply to avoid conflict in the hope that the customer won't ask for anything else and close a sale. I see them concede without making the beginnings of an argument that might help their company get a better deal. This is bad enough when involved in a win-win negotiation, but with hardball negotiators it can be disastrous. Once you give in to a zero-sum negotiator and they smell blood, you can bet they will continue to ask for more.
Why do salespeople give in too early? I believe it is because most salespeople have at least a portion of their income based on incentive compensation and, therefore, a quota to achieve. It is natural for them to want to avoid anything that might make the customer unhappy and perhaps lead to the loss of a sale. Having spent most of my life having to close sales to make quota to hold onto my job, this is understandable.
On the flip side, because it is relatively easy to become a better negotiator, this doesn't need to continue. It isn't necessary to become completely comfortable playing hardball when a couple of key tactics will suffice. Giving ground too easily can be a habit that can be broken with a better understanding of the negotiation process and tools to help.
With the information contained in this book, a salesperson should be able to better hold his or her ground regardless of the product or service.
Number Two Negotiating Mistake: Conceding and Getting Nothing in Return
Perhaps because of the overwhelming influence of the win-win philosophy, too often salespeople give away price, term, conditions, and more in hopes of getting the other side to "play nice" and return the favors. Making concessions without a counter-concession in a zero-sum negotiation can be devastating to your desired outcome, as your profitability quickly erodes. Unfortunately, making concessions to a hardball negotiator is like feeding meat to a carnivore hoping it will eventually become a vegetarian.
It isn't going to happen.
When customers make demands for discounts, better terms, or sample products, I see salespeople respond with phrases like, "I'll see what I can do" or "I have to run this by my manager." And these salespeople frequently concede price, terms, and conditions without asking for anything even close to reciprocal value. More than a few sales managers have complained to me that their people are better at negotiating with them than they are at negotiating with their customers.
Many negotiation philosophies preach the idea that making concessions is bad, and I agree up to a point. But trading concessions in order to get something of greater value to you or your company can be a powerful negotiating strategy with more upside benefits than downside risks.
Also, some negotiation experts specialize in teaching people how to respond to eleventh-hour requests for additional concessions. They think that the best approach to responding to customer "nibbles" is to reopen negotiations or to simply walk away. But that is mostly unnecessary if you understand the reason customers make these demands. The reason people encounter so many last-minute requests for these so-called "nibbles" is because they don't teach the other side that to get a concession, they will need to make a concession; that concession comes with a cost. Beginning a negotiation with a reciprocal concession strategy quickly stops this type of petty bargaining ploy.
So if the two most common negotiation mistakes are giving ground too quickly and getting nothing in return, then the two most important skills would be the opposite.
The Most Important Negotiating Skill: Holding Your Ground
You can quickly become a better negotiator if you understand the strategy and tactics necessary to defend your position in any given negotiation. Many people think that the next move once a price is on the table is to make a counteroffer. That is actually not the case. The next step once your price is on the table is to defend that number. Doing this in any negotiation is important, but it becomes an especially critical skill when up against tough bargainers.
Salespeople who are good at holding their ground typically sell value more than price. They ensure that the selling process is complete before they begin negotiations. Those who give ground too easily are often uncomfortable with pushing back on demanding customers. They think that pushing back means risking the sale.
This is simply not true.
Price is related to value, and the strength of your argument regarding the value your product brings to the customer defines how well you hold your ground. A strong value proposition can determine how close you end up to your asking price. Techniques for holding your ground, especially against tough negotiators, are relatively easy to learn, practice, and become good at.
So once you improve your ability to hold your ground, you are in a better negotiating position. But at some point something has to give. This is when the second most important skill comes into play.
The Second Most Important Negotiation Skill: Trading Concessions
If the second most common mistake is making concessions without getting anything in return, then the second most important skill to improve outcomes for yourself and your company is getting comfortable with trading concessions and less comfortable with making concessions. It is important to realize that conceding is not necessarily a bad tactic as long as you insist on reciprocal concessions from the customer or buyer. It is one way to ensure a more mutually acceptable agreement with better compliance and accountability. If both sides have to give, then the commitment to the outcome by both sides is also greater.
The skill of trading concessions can be easily learned. It is almost a change in a salesperson's mindset that makes offers and counteroffers much easier to identify and succeed.
A negotiation strategy that integrates reciprocal concession-making quickly improves profitability and commitment to contract terms. Unfortunately, in almost every — no, make that every — industry I work in, making concessions seems to be standard operating procedure instead of trading concessions. The customer always gets the better end of the deal than does the salesperson and his or her company.
The Three Phases of Negotiation
Most negotiations go through three distinct phases. In a simple negotiation with few items in play, a person may go through these steps very quickly: offer–counter–deal. You wouldn't want or need a complex strategy model for negotiating something as simple as a used car. However, in a complicated negotiation with multiple parties and multiple interests, all three steps are crucial. The three phases are: First Offer, Counteroffers, and Best and Final Offer. My negotiation strategy and the rest of this book follow the same flow and development of a negotiation through these three phases.
I begin each phase with the higher-level, more complex discussion of strategy. Although this might not be as important for your specific negotiation, the strategy for each phase differs with emphasis on some factors more than others. Then, within each negotiation phase, there are tactics that help you achieve a better, more profitable outcome, especially when up against tough customers. So although your negotiations may not go through each phase, strictly speaking, the tactics used in each will help you regardless of the negotiation situation. Though all of the negotiation strategies may not be applicable to every negotiation you experience, I think you will find value by reading through the phases in their entirety.
The Negotiation Process
Salespeople are good at taking concepts and quickly applying them to their sales process. For that reason, I am providing a quick overview of negotiation's three phases, including the strategy and tactics that most matter. I recommend people read the entire book, but use the following section as a reference to remind you of the salient points in each of the subsequent chapters.
Phase 1: First Offer Strategy
I think the best place for you to start learning how to better hold your ground is at the place negotiations typically start: the First Offer. Until the initial offer in any negotiation is presented, whether it is the asking price or an initial proposal, the true back and forth of negotiation can't proceed. Until that happens, everything else is positioning.
So the distance between your First Offer and your Best and Final Offer is the ground you have to play on — your "field of profit," let's call it, or "wiggle room." The better you hold your ground, the better the deal for you.
If you make a First Offer and the other side takes it immediately without countering, you might have been better off if you took your time and thought about your opening offer; you most likely left some money on the table, agree? The key to defending your number is understanding the value your product brings to the customer and how to communicate that.
The first step in your negotiation strategy is to understand the importance of having a strong opening position or First Offer. You need to put the tough customer on the defensive right from the get-go and there are ways to do that. Prepare to engage with a deliberate and thoughtful approach to protect your profitability and challenge the other side's tactics.
First Offer Tactics
#1: Get them to put their number on the table first.
With a very few exceptions, you are always in a better position if the customer makes the First Offer, especially tough customers. It puts you in a better negotiation position if you know how far apart you are prior to revealing your First Offer. You have the advantage and luxury of knowing how far apart you are before the other side knows.
You should never counter a First Offer before you know the gap between what they want and what you want. Making counteroffers without knowing this gap is negotiating in the dark. If you can get them to share their starting price or request, even a ballpark number, you are better off. This gives you the advantage of revisiting your number and deciding if it is too high or too low. The number you begin with often defines where you end up. The more information you have before putting your number on the table, the better your position.
#2: Make them defend their number.
When and if you get them to reveal their number, the next step is to pressure the customer to justify it. The question "How did you come up with that number?" is one I rarely hear in any negotiation. By using this question, you catch tough customers off-guard and communicate that you are a worthy adversary. Challenging them to defend their starting price or First Offer is the first step in weakening their position and strengthening yours. When an opponent, regardless of how difficult a game they play, is asked to defend his or her First Offer, it puts them psychologically on the defensive, especially if their opening position is not that well thought out.
#3: Conditionally put your number on the table.
After uncovering and challenging their number, you can better determine whether your opening price is too high or too low and adjust your strategy accordingly. If the other side has a weak argument for his or her opening position, perhaps you can ask for more or offer less.
At some point, however, you have to provide the other side something to work with. Once you reveal your number, a good negotiator will test it to determine if you have some flexibility: Is your price firm or negotiable? So how do you respond to the question "How firm is your price?" The wrong answer is "Firm," but so is the answer "Negotiable." But what is the right answer?
#4: Defend your number.
No negotiation guru has ever given me a good response to the question "What number do I start with?" They will tell you something like "Every situation is different" or "It's not about who presents the first offer. It's about the level of trust between the two sides."
Give me a break. It is about the number and it is about who makes the First Offer, especially if you are in sales.
If you can't answer the question "How did you come up with that price?" or "What makes that fair?" then you are the one on the defensive. The first step in defending your number is having a good answer to those questions. You defend your starting point by ensuring you can logically explain how you arrived at your opening position. Confidently communicating why your product or service is worth the difference in price is crucial to holding your ground. A strong defense of your opening price communicates to the other side that you will fight to hold your ground. Defending your ground is the most critical first step in any negotiation.
But once you know the gap between what you want and what the other side wants, something's got to give. Mounting a sturdy defense of your number is crucial to holding your ground. However, when both sides' numbers are on the table, the only way to close the gap is through offers and counteroffers until you reach some mutually agreeable (or mutually disagreeable) midpoint.
Phase 2: Counteroffers Strategy
This negotiation phase may be longer or shorter depending on the amount at stake and number of items in play. As I stated before, there can be one or more counteroffers depending on the situation. As for hospital negotiations, I've seen as many as 30 counteroffers prior to reaching an agreement. In smaller, less-complex negotiations, like buying something from Craigslist, sometimes one counter is enough.
The Counteroffers phase is really the heavy carry of the negotiation process. It is when strategy and tactics are most important to a good outcome, especially when up against a zero-sum negotiator. When to give ground is a crucial decision, but even more important are the decisions regarding how much your side gives up and how much you ask for in return. Improving your skills in this phase will give you much better outcomes and more satisfying agreements for your side.
Your strategy here is to ensure you establish a reciprocal value exchange whenever possible. But even if you cannot always get the exact value that you relinquished, simply ensuring that you trade instead of make concessions will improve your deals almost immediately.
Give and take is the essence of negotiation. When giving ground, tough negotiators set the expectation that if they are forced to give something up, they will insist on reciprocity. They don't ever "make" concessions; they always "trade" concessions. You should return the favor.
Counteroffers Tactics
#1: Hard sell every concession.
No concession to a tough customer should ever be made with the comment "Sure, we can do that," even if you can. Concessions should be hard fought and hard won. Even a small change in your response, from "Sure, we can do that" to "Sure, we can do that, but not at that price," is a start. Nothing is ever "free" or "no problem" when negotiating with a person who plays hardball. Everything is worth something and therefore should be "traded" for something in kind.
#2: Never make a concession without getting one in return.
One of the most common mistakes people make in negotiations is to concede more and more ground without making it contingent on reciprocal concessions. This teaches customers to ask for concessions without the expectation of ever having to give up anything in return. Though it seems to be almost standard in many of the negotiations I witness, it is very easy to change this mindset. If you bring to mind some of the larger negotiations in politics and world affairs, you can see that it is common for both sides to give up things in order to reach an agreement. Why not the same in sales?
(Continues…)
Excerpted from "Negotiating with Tough Customers"
by .
Copyright © 2016 Steve Reilly.
Excerpted by permission of Red Wheel/Weiser, LLC.
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